Business, Legal & Accounting Glossary
A family of funds refers to a group of mutual funds that are offered, managed and/or distributed by the same investment company, even though each fund in the family of funds may have a different objective. For example, one fund in a family of funds may be a growth fund, while another fund in that family of funds may be a money market fund. Investors can typically move assets between the funds of a family of funds at little or no cost. This allows investors to more easily respond to changes in the market or their needs. However, there could be tax consequences for transferring money from one fund to another in a family of funds. A benefit of a family of funds is that investors can receive a single statement that describes all their holdings in the fund family. Some companies that maintain a family of funds are AIM Investments, Fidelity, Janus, Oakmark, PIMCO, Putnam, and Vanguard.
Many large mutual fund companies provide a wide range of stock, bond, and money market funds with varying investment strategies and objectives. These funds are part of a family of funds. If you own one fund in a family, you can usually transfer assets without incurring sales charges to another fund in the same family. The transaction is referred to as an exchange. However, unless the funds are in a tax-deferred or tax-free retirement or education savings plan, you’ll have to pay capital gains taxes on the fund’s increase in value. Investing in a fund family can help with diversification and asset allocation if there are funds within the family that meet your investment criteria. Investing in a fund family can also help to simplify recordkeeping. The benefits of consolidating your assets within one fund family, on the other hand, are being challenged by the proliferation of fund networks. Fund networks, also known as fund supermarkets, make it simple to spread your investments across multiple fund families.
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This glossary post was last updated: 5th April, 2022 | 0 Views.